China pledges $124bn to Silk Road initiative

China’s President Xi Jinping has pledged $124 billion for his ambitious new Silk Road plan, saying everyone was welcome to join. (Photo by AFP)

China has pledged as much as $124 billion to a project which is meant to revive the ancient Silk Road intercontinental trade route.

The Belt and Road initiative could be the world’s most expensive multi-modal transportation project.

It is expected to funnel investments worth up to $502 billion into 62 host countries over the next five years. Analysts say most funds may flow into India, Russia, Indonesia, Iran, Egypt, the Philippines and Pakistan.

The web of trade would span over countries representing more than 40 percent of the world’s GDP, that are home to 4.4 billion people -- more than half of the world’s population -- giving it a potential to affect global trade patterns.

Chinese President Xi Jinping – in his address at the opening ceremony of a high-level two day summit to discuss the project – emphasized that everyone was welcome to join what he envisioned would be a path for peace and prosperity for the world.

"We should build an open platform of cooperation and uphold and grow an open world economy," Xi told the opening of a summit on the new Silk Road.

"We should jointly create an environment that will facilitate opening up and development, establish a fair, equitable and transparent system of international trade and investment rules," Reuters quoted him as saying.

The bulk of funds that Beijing would allocate to the project would be supplied from China Development Bank as well as Export-Import Bank of China, collectively at around 380 billion yuan ($60 billion).

President Xi also emphasized that his government would encourage financial institutions to expand their overseas yuan fund businesses to the tune of 300 billion yuan ($45 billion) for the project.

The rest would be supplied other mechanisms including South-South Cooperation fund, Silk Road Fund and as financial aid to Silk Road countries.

Leaders from 29 countries are attending the forum, which ends on Monday.

There are also several European leaders attending, including the prime ministers of Spain, Italy, Greece and Hungary, Reuters added.